Napster Names New CEO

Music-swapping site Napster named Konrad Hilbers, an executive with Bertelsmann AG, its new chief executive officer Tuesday and said that his first task will be to oversee Napster’s transformation into a fee-based service.

Hilbers takes over Napster’s top spot from Hank Barry, Napster’s interim CEO since May 2000. Barry, who was praised by the company for battling the “major record companies that sought to shut down the company,” retains a spot on Napster’s board of directors.

“The appointment of Konrad Hilbers is another step by Napster into the music industry establishment,” Webnoize analyst Matt Bailey told the E-Commerce Times. “He is seen as someone executives at other labels could potentially do business with.”

Bailey added that Napster is trying to “get away from its roots as a renegade.”

Bertelsmann has been Napster’s chief financial backer since forming an alliance with company in October.

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Hilbers’ last job was as executive vice president and chief administrative officer at BMG Entertainment, Bertelsmann’s music arm.

Hilbers also brings to the table extensive experience in the online realm, having managed the AOL, Netscape, and Compuserve brands in Europe from 1996 to 2000. Hilbers was educated in Germany and Switzerland and holds a Ph.D. in business administration.

“Konrad’s extensive experience in the technology sector and the music business, in both the United States and Europe, makes him uniquely qualified to lead Napster into the future,” said Barry.

“His business acumen and leadership ability will be invaluable to Napster both in facing the immediate challenges and in developing a long-term business strategy that will build on Napster’s incredible potential in the digital music market.”

Tough Job

Hilbers faces a challenge in rebuilding Napster as a fee-based service. The Redwood City, California-based company’s service has been offline since July 2nd, when it shut down to upgrade the filters that are designed to keep users from trading copyrighted music.

On July 11th, the trial court entered an order barring Napster from restarting its music-swapping services until it could prove 100 percent compliance with an earlier order to block access to copyrighted music files.

A week later, an appellate court reversed the order barring Napster from restarting. Even so, Napster has not gone back online with its services.

Perhaps interestingly, a message on Napster’s home page alerts visitors to the trial court ruling against Napster, but makes no reference to the appellate court’s reversal.

Market Splits Apart

During Napster’s silence, many frustrated users have turned to other sites. A report released Monday by Nielsen//NetRatings found that traffic to Napster declined 36 percent during the past eight weeks ending July 15th.

During the same time frame, the report said that traffic increased at other file-sharing sites, such as Audiogalaxy.

A separate report released Friday by Jupiter Media Metrix also reported declining Napster usage. Jupiter found that worldwide use of Napster, measured in the number of minutes online, fell 65 percent between February and June.

“Napster needs to come up with its paid service pretty soon,” Bailey said, adding that Napster is in “good position to compete with other paid services” like AOL Real Networks, and that despite its dropping metrics, still has significant brand recognition.